Reservoirs drying up, farmers going bankrupt, suicides on the increase.
Australia's past few months have seen the country in severe drought,
claimed to be the worst in 1,000 years. The big cities all have water
restrictions and high temperatures have worsened the situation. Concerns
over climate change may even change opinion in Australia, which is the
only major industrialised country other than the US to have rejected the
Kyoto protocol.

The drought will affect the country's economy, but it is still forecast
to grow undramatically, with GDP expanding by 3 per cent in the next
year. There continues to be a two-speed economy, with mineral
resource-rich Western Australia and Queensland enjoying the benefits of
increased trade with China, while New South Wales remains in the
doldrums.

The prime minister, John Howard, now in his fourth term, will lead the
Liberal National coalition into federal elections later this year. He
will be facing a newly appointed leader of the opposition Labor Party,
Kevin Rudd.

Howard has put in place all the major reforms planned for his fourth
term: getting rid of the government's holding in the leading telecoms
company, Telstra, introducing sweeping industrial reforms, cutting
personal taxes, simplifying superannuation and loosening media
regulation.

The media laws passed in October 2006 marked the first overhaul of
ownership controls in Australian media in more than 20 years. They
nullify previous regulations introduced in 1985, which barred foreign
companies from controlling more than 15 per cent of a TV company and
more than 25 per cent of a newspaper publisher.

There has also been a relaxation of cross-media ownership laws governing
newspaper, radio and TV companies in the same city and a regulator will
monitor any activity.

Within hours of the law being passed, two major deals took place. The
broadcaster Seven Network took a 14.9 per cent stake in West Australian
Newspaper Holdings. Publishing and Broadcasting Limited, Australia's
biggest media and gaming company, announced the creation of PBL Media, a
joint venture with the private equity company CVC Asia-Pacific. It's not
clear if PBL will use the A$4.5 billion from the deal to buy
media assets.

News Corp has bought a 7.5 per cent share in its rival Fairfax and there
are continuing rumours regarding various targets, including the Ten
Network and the Federal Publishing Company.

Digital interactive media. Commercial electronic media developed in
Australia at a pace in roughly line with the US, making the planning and
buying of media more complex.

- Reigning media guru and why

Harold Mitchell, the chairman of Mitchell & Partners, is the most
influential media buyer. At the end of 2006, he announced the AUS$100 million merger of his ad company with the online minnow emitch, the
online venture it spun off five years ago.

- Media mogul to be seen dining with and why

Richard Freudenstein is the chief executive of News Digital Media, a new
division of Rupert Murdoch's News Limited.

- Car to drive: New Ford Focus.

- Phone to carry: MotoQ.

Whatever you do, don't say I'm going to fill the swimming pool, and take
a long shower.

BUZZ MEDIA IDEA OF 2006

Lynx Jet body spray won Universal McCann in Sydney the Media Grand Prix
at Cannes last year, as well as two Direct golds. Lowe Hunt's
controversial multimedia campaign featured a fantasy airline designed
for young men seeking sexual encounters. Conventional ads worked
alongside specially leased and decked-out jet planes.